An article of commerce (e.g., a product or trade item, a logistical unit for conveying the product, a service, a document relating to the product/service, and the like) is delivered by a brand owner from a manufacturer to a user through a multi-point logistical network that is commonly known in the art as a supply chain. Modern supply chains are quite complex and encompass multiple companies as brand owners/organizations/companies attempt to manage the movement of raw materials to finished trade items, and then through various distribution channels and intermediaries and retailers to users or end customers. Very few brand owners these days have tight management control over all aspects of the supply chain and its logistical operations as the brand owners tend to focus on their core competencies. Brand owners typically outsource a large number of supply chain operations, e.g., manufacturing or distribution channels or raw materials supply, to those whose core competencies are superior to their own. The supply chain not only includes the manufacturers and suppliers of the articles, but also the transporters, warehouses, central distributors, regional distributors, retailers and end customers themselves. More than one entity may be involved at each site, location, or like point of the supply chain.
Brand owners, however, must track their articles as the articles move through the supply chain to assure that their articles are being distributed and traded in a lawful manner. Without having a secure supply chain that cannot be compromised by unscrupulous parties, it is difficult for brand owners to be certain that the consumers are indeed receiving authorized or genuine articles through channels authorized and approved by the brand owners.
Hence, the securement of articles from authorized manufacturing sites of brand owners to distributors, and then to retailers, and finally to end customers, is of paramount importance, especially to thwart article counterfeiting, diversion, theft and product overrun of the articles in the supply chain. Brand owners have tried various methods to assure the security and integrity of their supply chains. Some of these methods have employed security seals, wax seals, armed escorts and guards, markings of various kinds, trusted and authorized distributors and retailers, cryptographic certificates, mechanical and electronic means, radio frequency identification (RFID) reader-based systems, barcode reader-based systems, and computer-based systems, etc. However, counterfeiters, thieves, product diverters, product overflow companies and like parties have also become quite sophisticated in compromising these security systems. As a result, serious problems continue to plague the security and integrity of supply chains.
In addition to providing security during article distribution, there is also a need to combat counterfeiting of articles entering the supply chain at various points therein. This requires monitoring the entire chain of distribution. The raw materials and components for manufacturing products may come from a variety of sources. Sub-assemblies may be produced by subcontractors in different parts of the world, and the final assembly and packaging may take place in another part of the world before being distributed in markets around the globe. It is, therefore, highly likely that a large number of parties have access to the articles along the supply chain. Therefore, it is essential that article security be assured along the entire chain of commerce.
One major cause of concern to brand owners is product overruns. Brand owners typically have their products manufactured in different parts of the world. Some of their products are manufactured in captive locations of the brand owners; some products are outsourced/subcontracted to contract manufacturers; and some products are produced under a license by third parties. This may be to meet the needs of a local market, or due to lack of capacity, or due to lower labor and material costs in certain parts of the world. One month a product may be manufactured in one part of the world, and the following month the same product may be manufactured in another factory in another part of the world due to a shortage of raw materials, regional conflicts, customs problems, shifts in customer demands, labor strikes, and transportation and labor costs. Sometimes, a product may be manufactured in several countries by these different manufacturing enterprises at the same time, and the brand owners then have to manage their products as they move into the distribution chains in different countries. Sometimes some of these subcontractors produce more than the quantity requested by the brand owners. The additional products, also known as product overruns, produced in this manner are then distributed through unauthorized/illegal channels depriving the brand owners of their just revenue and profit.
Article diversion is another major issue faced by a brand owner and typically takes place during the distribution of articles on a global scale. For example, brand owners may want to increase their sales in untapped countries and emerging economies. The prices they charge in these markets are substantially lower than in their established markets. Some unscrupulous companies who specialize in export diversion buy branded products intended for untapped foreign markets at deep discounted prices. They then divert or ship these products into established markets and illegally resell them to dealers and retailers in the established markets for a significant profit and, in turn, deprive the brand owners of their rightful revenue and profit. For example, pharmaceutical products intended for a poor country can be repackaged and diverted and exported to another country where the price may be much higher.
Product diversion may also be due to other causes. For example, a high-end company may contract with a high-end retailer or class of trade to sell their products to protect their reputation. A contractual clause may require that the products should not be sold outside of the high-end retailer. However, the products may sometimes be diverted to low-end discount stores. This can occur, for example, if the products in the high-end store are not moving, and there is an excess inventory. It is difficult, however, to find out which high-end retailer was responsible for product diversion.
Unauthorized product diversion may also take place to avoid taxes. For example, products manufactured and sold at one location may be subject to controls and taxes, etc., while these controls and taxes may be much less at another location. As such, products may be illegally distributed, diverted and smuggled to avoid taxes. It is well known that governments all over the world lose tax revenue, e.g., excise tax, from illegal import of trade items and cross border trading (e.g., tobacco, foods, alcohol, pharmaceuticals, etc.). This problem has reached a monumental scale and, in addition, excise tax evasion also contributes to income tax evasion and creates a black market economy. Governments have tried various methods such as excise stamps applied to every trade item. However, excise stamps can be counterfeited. A database to record the tracking of legal products during the route from the source point of origin to the destination point is lacking. The problem of identifying the origin of the products and tracking their movement from the source point to the consumers, therefore, extends worldwide. For example, it may be desirable to know whether a particular product passed through a specific point in the supply chain, such as customs ports of a country, or the points where the product was manufactured.
Still another problem of importance is that of theft in the supply chain. Vans and trucks carrying high value goods such as expensive apparel, alcohols, and accessories are often hijacked. Their contents are then often split up and delivered to merchants without any trace.
In addition to product overruns, diversion and theft at various points in the supply chain, another major problem is that of counterfeit products entering the supply chain in multiple ways. It is becoming very difficult for the brand owners to find out where the counterfeit products are entering in their supply chains. Honest freight consolidators, central distributors, regional distributors, and retailers have no way of knowing if a shipment of the products that they received for further movement along the supply chain is really authorized or authentic.
Problems of counterfeiting are worsening due to globalization, causing loss of revenue for brand owners, and threatening intellectual property rights and investment in research and development. Counterfeiting also carries a negative impact on a brand image when customers realize that the quality of the branded product may not be what they have paid for. As factories around the world become proficient in manufacturing, counterfeiters have also become more sophisticated. It often takes real experts to recognize a counterfeit product from a genuine one.
Finally, consumers have little way of knowing whether the products that they bought are authorized or unauthorized. If a consumer bought a product believing the product to be authentic, and then, if not satisfied, attempts to return the product to the brand owner, then the consumer will be frustrated if the brand owner refuses to accept the product. At times, the brand owner may not be able to differentiate a genuine product from a fake returned product. This causes increased warranty and repair costs for the brand owner in addition to lost reputation. There have been instances where the brand owner had to recall products from the market, because it was difficult for the brand owner to prove that the products the consumers bought were not their products. There are also regulatory requirements that the brand owners must protect their supply chains.
In general, the existing methods of securing a supply chain fall into two main categories: a type of track and trace technology, and a type of anti-counterfeiting technology. In the track and trace method, barcoded labels or RFID tags were typically used to track the movement of articles along the supply chain. For example, package delivery companies routinely tracked their packages by reading package labels/tags with electro-optical imagers or scanners at various points, e.g., distribution centers, in the supply chain, and the information, about the packages and the geographical information of the distribution center where the packages were read, was input into a database. Any individual can retrieve the information about where his/her package is at anytime by logging in into the delivery company's web site through the Internet, and accessing the database. However, RFID tags can be tampered with by unscrupulous parties, and barcoded labels can be easily copied. Barcodes and RFID technology can identify, but not authenticate, the package.
The art has tried to modify and combine barcodes, RFID, decryption and like approaches to further strengthen the track and trace method. However, a counterfeiter may simply copy the unique codes and produce multiple products with the same unique code. None of the present technologies are effective in either preventing counterfeiting, diversion, product overruns or theft, or in preventing any unauthorized articles from entering the supply chain. Also, it is essential that the system and method used in tracking and authenticating products during movement along the supply chain be user friendly, because the skill sets of individuals in the supply chain are typically very low, and the speed of authentication is critical. To date, brand owners have no tools to track the integrity of the supply chain in real time, or to know the location and time where and when the supply chain has been breached. This invention makes every individual or scanner that tracks an article of commerce a quality inspector to track, trace and authenticate the article of commerce at any location and at any time.
Skilled artisans will appreciate that elements in the figures are illustrated for simplicity and clarity and have not necessarily been drawn to scale. For example, the dimensions of some of the elements in the figures may be exaggerated relative to other elements to help to improve understanding of embodiments of the present invention. Some of the elements may be combined into smaller subsets or further broken down during implementation.
The system and method components have been represented where appropriate by conventional symbols in the drawings, showing only those specific details that are pertinent to understanding the embodiments of the present invention so as not to obscure the disclosure with details that will be readily apparent to those of ordinary skill in the art having the benefit of the description herein.